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Forbes.com

 

My Tax-Free Roomba

August 05, 2009

By Peter W. Huber

I see a jobless recovery every time one of my three iRobots cruises around the floors of my home. The Roomba vacuums most of the house. The Dirt Dog does the heavy lifting in the basement, garage and den. The Scooba scrubs the kitchen floor. What I want next is a mini-Scooba that gets into the tightest corners of bathrooms. Then a stair climber, a window-cleaning crawler and a hockey-puck-size scrubber of counters and sinks.

Robots are smart, tireless and effective--and over the last two years they’ve cut our spending on household help by 80%. My thanks to the Pentagon for helping fund development of the technology for bomb disposal and such.

In all the economic gloom many people seem to have forgotten that we live in the most extraordinarily fecund technological age in history. This ought to be a terrific time for investors. Deploying labor-saving technology requires a lot of new capital but offers big productivity payoffs to businesses that buy the right stuff. Low-skill workers, on the other hand, have much reason to stay gloomy.

People pushing vacuums and mops aren’t going to keep getting smarter, cheaper, faster and more reliable, but iRobots certainly are. Mass production is slashing the cost and boosting the capabilities of high-power semiconductors and motors that control the flow of power to the wheels of hybrid cars. The electric drivetrains get their intelligence from digital microprocessors, which improve even faster. Incorporated into big robots rather than cars, these same technologies can assemble the cars themselves or anything else that’s built on an assembly line. The management of robots is being automated, too, using increasingly powerful software and networks that link them horizontally across factory floors, and vertically through supply chains, which span raw materials sources to retailers.

Employment in the service sector of the economy is also vulnerable to competition from intelligent machines. Car mechanics connect a computer on the shop floor to the one under the hood and then do as the machines direct. And the mechanics fix a lot less than they used to, because friction, wear and factory defects plummet when robots machine the parts and assemble the cars. McDonald’s ( MCD - news - people ) has already automated much of what it takes to move the calories from the farm to the drive-through window and will inevitably automate almost all the burger flipping and bag filling, too. Secretarial help largely disappeared from many professional lives years ago. Travel agents, sales clerks and cashiers are slipping out of lives that view shopping as a chore, not a social activity. Digital technologies are fast displacing the printers, distributors and retailers that stand between readers and publishers.

Higher-skilled service providers are next in line. Many of the hours billed by accountants melt out of my life as wired networks knit together my electronic paychecks, financial accounts and tax returns. I’ve hired hundreds of bright young researchers over the course of my professional life; today I get answers from Google ( GOOG - news - people ) in far less time than it would take to explain most of my questions to a live assistant. WolframAlpha, the “computational knowledge engine” for retrieving and crunching numbers and solving equations, could well emerge as the Google of the quantitative world.

Much of the time Washington seems determined to help kick the marginally competitive labor off the edge even faster. The prospect of new payroll taxes will certainly accelerate automation--I don’t pay Social Security or health care taxes on my Roomba. Machines don’t join unions and don’t hire lawyers to pursue far-fetched claims of discrimination or job-related injuries. For shareholders and lenders, companies that invest in machines have become much safer bets than companies that invest in people. Machines don’t use political muscle to seize the company’s assets when businesses get into trouble.

Washington can undoubtedly find ways to suppress investment in the machines, too. Environmental edicts that jack up the price of energy--electricity especially--will suppress investment in chip fabs, Web server farms and all other energy-intensive industries. Tax laws are easily jiggered to discourage capital purchases and prop up uneconomic employment. But that kind of employment will have to be subsidized by the economic kind--which can instead flee to India or China. Washington’s choice now is between a jobless recovery and no U.S. recovery at all.

Original Source: http://www.forbes.com/forbes/2009/0824/people-ideas-irobots-tax-free-roomba-insights.html

 

 
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